The healthcare sector may have done poorly in recent years, but analysts are optimistic about it at the moment. “Just two weeks into 2024, the healthcare sector has shrugged off the title of being a notable laggard in 2023,” Citi said in a recent note. Higher interest rates were a key hurdle, she noted. But Citi now hopes the environment will improve. “We believe healthcare investors can overcome this wall of concern in 2024. We expect the Federal Reserve to ease its restrictive monetary policies over time. And we are already seeing a stabilization in biotech financing.” “However, for those who have joined the unstoppable twin trends of longevity and innovation, the 2023 recession has created opportunities. In our view, many of the problems that held back healthcare sector actions are temporary, which creates a favorable environment for the sector's potential outperformance in 2024,” the bank added. Analysts have cited biotechnology in particular as one of the few areas to watch. Growth stocks, such as technology and biotech, often benefit from rate cuts. To find biotech stocks that performed well last year and that analysts remain positive about, CNBC Pro examined the iShares Biotechnology ETF and the SPDR S&P Biotech ETF. These were the criteria used: Increase of more than 20% in 2023. Potential to increase the average target price of more than 40%. Purchase rating of more than 70%. Seven or more analysts cover the stock. These 10 stocks were among those that appeared on the screen. Four stocks stood out as having on average more than 100% upside potential: Humacyte, Marinus Pharmaceuticals, Olema Pharmaceuticals and Ovid Therapeutics. A fifth stock, Biomea Fusion, earned more than 200% upside over the average price target and a 75% Buy rating from analysts. Biomea first came into the spotlight when Citi gave it more than 800% upside in a note last November, as the bank cited its treatment therapies as having “potential advantages” over others. Three other stocks on display earned 100% buy ratings from analysts: Ardelyx, Cabaletta Bio and Rocket Pharmaceuticals. Of these three, Rocket Pharmaceuticals had the highest growth potential, at 81.4%.
